The market demand of Chechil cheese in Bloemfontein
Lambrechts, Hendrik Adam Albertyn
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Innovation is the only undisputed catalyst for growth and wealth creation over the long term. However, launching a new product entails significant risk for established as well as new businesses. In order to minimise some of these risks, demand forecasts are necessary to construct the commercial elements of the business (or product line), create revenue models, predict profits and cash flows, judge feasibility, define suitable pricing structures and levels, and quantify financing requirements. This study determined demand for Chechil cheese as a new product in Bloemfontein in order to guide future decisions during the new product development and launch process. Demand was measured according to three criteria. First, respondents were asked to what degree they liked or disliked the product on a five point scale. Second, respondents' reactions are substantiated by determining whether they would recommend the product to a friend, colleague or relative. Last, price sensitivity was measured by determining each respondent’s likelihood to purchase 100g of the product at R30, R45 and R60. It was found that the overwhelming majority of respondents indicated that they liked the product and that they would recommend it to a friend, colleague or relative. Respondents indicated inelastic demand between the R30 and R45 price points and elastic demand between R45 and R60. Findings from this study could be used in conjunction with further internal analysis of the business' supply curve in order to establish the optimal price point to launch the new product.